Home Economy News Gasoline, food boost US producer prices in February

Gasoline, food boost US producer prices in February


Gasoline, food boost US producer prices in February By Reuters

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Published Mar 14, 2024 09:31AM ET
Updated Mar 14, 2024 09:36AM ET

© Reuters. People pump gas at a Sunoco gas station after the inflation rate hit a 40-year high in January, in Philadelphia, Pennsylvania, U.S. February 19, 2022. REUTERS/Hannah Beier/File Photo

WASHINGTON (Reuters) – U.S. producer prices increased more than expected in February amid a surge in the cost of goods like gasoline and food, which could fan fears that inflation was picking up again.

The producer price index for final demand rose 0.6% last month after advancing by an unrevised 0.3% in January, the Labor Department’s Bureau of Labor Statistics said on Thursday. Economists polled by Reuters had forecast the PPI climbing 0.3%.

A 1.2% jump in the prices of goods accounted for nearly two-thirds of the increase in the PPI. Goods prices were driven by energy products, which surged 4.4% after declining 1.1% in January. Goods prices had edged down 0.1% in January.

In the 12 months through February, the PPI shot up 1.6% after advancing 1.0% in January.

Government data on Tuesday showed consumer prices increasing strongly for a second straight month in February. But economists largely shrugged off the rise, arguing that difficulties adjusting the data for price increases at the start of the year continued to exert an upward bias on inflation.

Wholesale gasoline prices rose 6.8% last month. There were also increases in the prices of diesel and jet fuel. But prices for hay, hayseeds, and oilseeds fell as did those for iron and steel scrap and asphalt. Food prices rose 1.0%, amid increases in the costs of eggs and beef.

Excluding food and energy, goods prices rose 0.3%, matching January’s gain. This suggests that goods deflation, the major driver of lower inflation, was drawing to an end and services would need to pick up the slack in easing price pressure.

Services gained 0.3% in February after rising 0.5% in the prior month. A 3.8% increase in the costs of hotel and motel rooms accounted for a quarter the increase in services prices.

There were also increases in the costs of outpatient care, airline tickets as well as securities brokerage, dealing and investment advice. Portfolio management fees gained 0.2% after accelerating 5.9% in January.

Portfolio management fees, healthcare, hotel and motel accommodation, and airline fares are among components that go into the calculation of the personal consumption expenditures (PCE) price indexes. The PCE price indexes are the inflation measures tracked by the Federal Reserve for it 2% target.

Financial markets expect the U.S. central bank to start cutting interest rates by June. Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25%-5.50% range.

The narrower measure of PPI, which strips out food, energy and trade services components, rose 0.4% in February after climbing 0.6% in January. The core PPI increased 2.8% year-on-year after gaining 2.7% in January.

Gasoline, food boost US producer prices in February

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